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Updated over 11 years ago on . Most recent reply
Private Lending secured by Mortgage
Do you necessarily need a promissory note if you file a mortgage? Say for example, I lend someone $5,000 on a free & clear house (listed for sale with a Realtor) and file a mortgage for $10,000 once the house sells.
Would I need to fill out a promissory note as long as the mortgage is recorded with the county? Could I make it a performance mortgage with the "performance" being the sale of the house?
Also would this type of arrangement violate any usury laws? If there's no note I don't know if there would be any interest rate concerns.
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#1 Foreclosures Contributor
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#1 Foreclosures Contributor
- Real Estate Professional
- West Palm Beach, FL
What's the real question, or purpose? The mortgage is Not the debt, it's simply the collateral instrument if the Note is not paid, as per the Note terms.The note is the actual obligation to repay. Here, a mortgage, with no note ever created, is not enforceable. I assume you're lending to the buyer, not the seller.